CIR VS.

PETRON
Facts:
For the taxable years of 1995-1998, Petron Corp paid its tax liabilities with the tax credit
certificates it received from different companies as consideration for the delivery of petroleum
products to those companies. Petron’s use of the TCCs has been continuously approved by the
DOF as well as the BIR through its subsequent issuance of Tax Debit Memos. In a post-audit
conducted by the DOF, it was found out that the TCCs issued to the transferors were fraudulently
obtained and fraudulently transferred to Petron. Thus, the TCCs and TDMs issued to Petron were
cancelled by the DOF.
The CIR issued an assessment against Petron for deficiency excise taxes for the taxable years
1995-1998, inclusive of surcharges and interests on the ground that the TCCs which Petron used
to pay its taxes were cancelled and therefore has the effect of nonpayment of taxes. The CIR also
alleged that Petron has the intent to evade its taxes, thus making the returns it filed fraudulent.
One of the judicial admissions of Petron was that it never participated in the procurement and
issuance of the TCCs to its transferors. Also, before the CTA En Banc, it was held that Petron
was an innocent purchaser in good faith and for value.

Issue:
Whether or not the CTA En Banc erred in holding Petron innocent
Ruling:
The court agrees with the pronouncement of the CTA En Banc that Petron has not been shown or
proven to have participated in the alleged fraudulent acts involved in transfer and utilization of
the subject TCCs. The stipulation of fact by the CIR amounts to an admission, and having been
made by the parties in a stipulation of facts at pretrial, is treated as a judicial admission. Under
Sec4 rule 129 of the Rules of Court, a judicial admission requires no proof. Petron had the right
to rely on the joint stipulation that absolved it from any participation in the alleged fraud. The
joint stipulation made by the parties obviated the opportunity of the CIR to present evidence as
no proof is required for an admission made by a party in the course of the proceedings.